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tv   Squawk on the Street  CNBC  July 31, 2012 9:00am-12:00pm EDT

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in 30 years, you'll have a nice piece of wood that could fetch $1,000. >> jim grant, thank you for being here. we got to run. join us tomorrow. ""squawk on the street"" begins right now. ♪ as you can see, the latest s&p home prices should juhave bn released. i'm melissa lee with jim cramer. carl, a lot of nail-bit biters in that pool last night. >> yeah, amazing coverage last night. good morning shaping up here. if you like a few clouds. we have had some light rain. overcast conditions today.
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we're hoping that things can dry out for beach volleyball where they do play no matter where there's lightning or otherwise, unsafe conditions. couple of clouds over the games. more twittcontroversy over twit. more controversy over the empty seats. you might have seen on some of that coverage. we meet some greek fans who have made their way here to the games. talking about the euro and how they're being received. you guys are going to talk some coach. we're going to talk about omember, the official time keeper at the game. demand at the high end in china. because coach is getting walloped today. we'll see you guys in the few. >> interesting to see if omega is like the coaches of the world. >> very important. people think that michael kors may be the winner on coach.
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it's hit or miss. >> meantime, let's take a look at futures, how we're setting up for the open here in the united states. we take a look -- we're looking about flat here, no surprise considering that we do have the first meeting today. as for the picture over in europe, thursday's ecb meeting. we've got fractional moves on the european boards. meantime, our road map starts at the federal reserve. fomc's two-day policy meeting starts today. >> as you heard jim reference, coach shares are plum meting. the company said that 2013 is an investment year. >> as if the euro zone wasn't a big enough of headwind. ubs saw profits down 50%. it will seek full compensation
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for its losses. meantime, facebook gets an upgrade this morning. >> apple continue to climb. pushing above $600 a share. lot of ans the passion, what day will it be? september 12th, perhaps for that iphone 5. the central banks officials have signaled concern about weakening job growth and consumer spending. the wall street moving to see if the fed moves stimulus. we have heard steve in a number of reports. you know, personal consumption in particular seems to be a real concern, we saw the gdp report and we have gotten additional evidence that it's slowed. not just anecdotal just not from ceos, but we're starting to see it in the data as well. >> look, there's a lot of hope here.
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the fed saying something good. the ecb saying something good and the unemployment number being bad enough to create fed action. i think it's too much for the market. i think there's too many things that have to go right. >> the bias is towards the downside? >> i just think -- no. >> okay. >> what happens, if you think that everyone can go right that's a tall order. there are other issues about earnings that are interesting. and i think there's obviously, coach, we'll get to that. but i just think that the idea of everything goes right, has not really panned out and i say that, because of steve leisman's comments. he's saying -- they still want price stability over there. they had an inflation number that was pretty good in our country, we think. but the germans don't think. i think steve's comments really can't be overlooked. very important call that he just made. >> let's go through the various events this week.
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the investor perspective. not many people are expecting much from the fed tomorrow. they're expecting from mario on wednesday. it will be big enough, the markets have rallied to the point, where it's expecti ining quite a bit. friday, there's a jobs report. this is a difficult set of hoops to jump through. >> look, it can happen. people can be surprised. we had a rally on thursday friday. >> this has been a resilient market. i don't know what that means. we seem to grind higher in the face of a lot of potentially negative things. >> look, everything we just said, may be that coca-cola goes to 80 and our market is made up of pfizer, at&t. we're not an industrial country,
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per se. you may get numbers that aren't that great. numbers that aren't so great for ings ersoll-rand. i have been talking about at&t for a long time. >> how many times can we say at&t? the stock is up 27%. >> how many times can we say backstroke? the answer every time it matters. >> only every four years. >> but the gauntlet is both good for at&t and pfizer and bad for others. there's enough in this market to buy if the gauntlet can't be -- >> it's getting a little bit nose bleedish for at&t. don't you start to worry about
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valuation when it comes to these stocks? >> not if the 10-year is going 1.25. people at home -- >> as long as they're there's a yield, you're willing to pay a premium? >> people are going back to oil and gas. they see gas up higher. they're reaching for companies like pfizer. which is at a good number. pfizer is a bond where they can raise the coupon. >> i think you're right. i think every day there are thousands of conversations that go on between financial advisers and people of retirement age. >> what are we going to do? we need some income. what are we going to do? here's a list of utilities. 3.5% dividend and that conversation takes place. >> does this matter in the market, does it matter when you see the s&p up for the year? does it matter that the
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leadership came from these dividend large-cap companies? >> it's better than if we have leadership coming from mosaic. despite the fact that corn is high, the classic example is dow chemical, dow chemical missed the quarter. it was hideous. other than the fact that's china is horrible and europe is horrible and the united states is horrible. i don't even like that one. but because of its yield alternative, i can make a case for it. >> right. of course, when the fiscal cliff comes and capital gains and dividends are taxed with ordinary income things can change. >> will they? >> sorry. i'm just saying. >> maybe. >> i doubt that's going to happen. i think there probably will be action.
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>> volero, let's bring out some value today. it's splitting out. companies aren't sitting idling and say, let's just get hammered by the things that david faber just talked about. >> how do you feel being named a debbie downer on this desk? >> i don't mind. >> i have to admit i wasn't familiar with nuance. >> all right. let's move on to coach. those shares are down sharply. the luxury goods retailer reportirepor reportirepor reporting earnings below. leading the company to offer many-store coupons in those outlets.
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elsewhere, they were having very strong growth in china, up 16% in japan. but here in the u.s., at the lower end price point, they're not doing so well. >> interesting. remember that there's a moment in the starbucks call, where howard schultz was saying, yes, it's not just us. i have friends who are saying that july was bad because of this cracked, fractured confidence. should have realized frankfurt and schultz, that was this mind-set. this was an identical quarter to me of what howard said. discretionary isn't that great. at the same time, i can point to other companies doing well in this environment. i'm not sure if you want to sell. maybe kors is taking shares. lumber lick we day or thes,
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often seem advertised, they say things were good in july. there's a lot of good. and a lot of bad. >> wow. >> lumber liquidators. >> it was fantastic. it was as good as tractor supply. another place that i see you in all the time. >> michael kors. >> michael cost, are they taking share, is that possible sf. >> i don't think they overlap too much. i mean if you take a look at where coach is seeing the problems, it's in the factory stores. it's the lower price point. they're pretty high margins. lot of them are fabbic, the content of fabric is in each good is higher. but, you know, there have been some, any coach skeptic would
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say, they expend into the factory stores too much. in this sort of environment, where consumers are going high end or low end, do you mid-point price range? >> michael kors, which happens to be next to the coach outlet at the jersey outlet that i go to on weekends. does have a higher price point. burberry, coach, right next to michael kors. you'll spending a little bit of money when you go to kors. it does seem like they missed the market, like howard schultz, they misjudged the fractured consumer at their own. when i go over the dunkin' donuts quarter, it did better vente starbucks.
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>> huge. >> i just think sometimes it pays to go to dunkin' and kors and coach and burrberry. >> personal channel checks. >> hasn't paid to go to shares of facebook. although they're moving higher today. the firm lowering its price target. to $23. it had been $25. the company is worst $19 a share. with $4 more when you add social advertising. meantime, ubs saying it suffered a loss as as a result of facebook's botched ipo. ubs was a marketmaker on the ipo said it plans to take action against the nasdaq of gross mishandling of the offer. some guy kept buying and not
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getting the confirmation. but he kept hitting the button and eventually he got hit for a lot more stock than they ever thought. >> ubs is just a walking accident in every single way possible. that article about ubs in "new york times," ubs, let's say they're jinxed. >> they have had a rough go at it. >> huge trading loss, of course, yeah, they have had their share. >> on facebook, it talks about it has been well know, the 120 million shares will be add in august. an increase of 40%. maybe too early to buy facebook. although, if gm's marketing chief got fired because he didn't hire in facebook.
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>> did you read that in the newspaper? >> testing those flavors on facebook, two different sort of flavors of frito lay, they have beer-battered onion ring versus sweet corn chips. >> i boosted their quarter this week. holy cow, i just took down the whole section. >> meanwhile, it will be interesting to see how nasdaq is able to navigate a lot of litigation from those who lost a good amount of money. $350 million. >> that's a lot of money to say we're going to pursue, we're going to, you know -- yeah, exactly >> it's hard to lose your job in corporate america. how much did supervalu have to lose before that ceo lost his job? i also want to tell you that when i read this facebook, once
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again, have to remember, nothing, nothing went right. nothing. i mean, zynga, groupon, facebook. the zynga fight, they're going at it again. >> zynga and facebook is on it again. on the coins issue. these guys need counseling. they got to sit down with marriage counselor. i got to tell you, it doesn't always work. >> no. sometimes divorce is better. >> yeah. all right. coming up -- an exclusive interview with jc penney ceo ron johnson, who will make the push for a new concept. we're looking at a basically flat open here for the u.s. but got a lot of movers and want to keep an open at the moment. much more ""squawk on the street"" next. ogy as the world around it. with the available lexus enform app suite,
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welcome back to ""squawk on the street."" give you some headlines from the bundesbank. source telling us that the monetary policy should focus on price stability. coming days before the markets poised for prime action from the european central bank. problems say member states are facing in the european union are fiscal and these problems should be addressed by fiscal
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instruments. the question becomes, is this decisive for the european central bank, it has taken actions in the past over the objections of members of the bundesbank, we're hearing their opinions. meanwhile mario last week suggested that the ecb needed to act within its mandate and the differing interest rates on sovereign debt with within its mandate. i think these comments should serve to dampen those expectations but not necessarily eliminate them all together. >> right. the familiar dynamic that we have had, where we hear one thing one week and the market reacts and the german pour water on it. again, we're always relying on different reports.
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>> right. >> the overall feeling is, okay, maybe not so much. >> exactly. and i think the cold-water metaphor is a good one, it's how hot are the coals? if he doesn't deliver on thursday, this will be a substantial knock to dragbi's reputation in the market. if he did act without the board members on board here, then he was -- maybe he deserves to be damp down there. >> we'll keep an eye on the broader markets. let's get back to that key housing data this morning. home price report, average home prices increased by 2.2% in may over april. for both 10-city composites. it looks like things are moving in the right direction for the second month in a row, correct. >> that's right. that's right. what we have seen is two months
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of positive increases. we were expecting that because this is spring. if you look across the board and more broadly, we're seeing improvement there is. that combination shows that there perhaps a bit of turnaround. >> when was the last time we saw this kind of that momentum? >> we have had, ever since the downturn, we have had a bumpy ride, we saw some momentum three times in a row, the first was with the homebuyer with the tax credit, last spring and now we're seeing it again. now we have had this bumpy sideways movement. we need to wait a few more months to see if we really turned around or not. >> atlanta, a major, you know, plus 4 this time, you're not good, obviously, but not bad. >> atlanta is still in very bad shape. the annual rates are down almost
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15%. that's one market that's truly suffering. it seems to be lagging all of the other markets. most of the other markets are moving into the positive territory. >> maureen, thank you for your time. >> phoenix posted the annual return. >> all right, meantime, let's get to our twitter question. her i am-webster getting ready to add new words. but economic word you induct. meantime the mad dash is coming up next. stay tuned. yeah, you -- you know, everything can cost upwards of...[ whistles ] i did not want to think about that. relax, relax, relax. look at me, look at me. three words, dad -- e-trade financial consultants. so i can just go talk to 'em? just walk right in and talk to 'em. dude, those guys are pros. they'll hook you up with a solid plan. they'll -- wa-- wa-- wait a minute.
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. four minutes before the opening bell. time for cramer's mad dash. >> i think this may be the biggest story of the day. monster quarter for cirrus logic. they are the audio system for apple and obviously, they are saying we're going to do a gigantic built, that's one of the reasons. >> apple is up 137% this year. >> if you want to know why apple has great sound in your iphone and in your ipad, it's cirrus. by the way, they're not allowed to mention that. the conference calls are hilarious. "the big client" they'll lose the business if they hear apple hearse them. >> go buy apple. >> that was the take-away. everyone can say that coach's bad. we can talk about germany. but, remember, this was the stock that disappointed.
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look at where it is now. >> yep, all right. we'll be watching apple closely and other stocks closely when the opening bell ring three minutes from now. stay with us.
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there we go, the trading session is under way at the big board. at the nasdaq casual footwe footwearmaker srx, doing the honor over there. we have an exclusive interview with the ceo of jc penney coming up. of course, we'll watching shares of coach, it looks like a very ugly open for shares of coach, down 18.25%. at one point, jim, this had been a market darling. coach could do no wrong. is it time to consider that it could be an entry point sf. >> the comment that david made,
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the reason why, it's such a darling it's international. international is pretty good. >> they have china. we love china. we're going to bid on coach. here we go, opposite world. >> people have always loved this executive team. he gets the highest marks of as on operator out there. >> i think one of the problems that i have what howard schultz said, the investment year of starbucks, was code for, don't jump in, we're investing. but lou frankfurt is so good. i wonder if he's going to buy up his stock, he has done that before on disappointments. we all respect him so, it's hard to believe that he could be so off his market here. holy cow the coupon, the execution bad. i got to a find out more. >> take a look at cummings
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engine. inline second margins. they cut their revenue forecast. a growth of 10% here. you see the stock going higher? >> preannounced. >> right. what happens? >> time honored. >> you got to wonder. we're looking at that as well. >> they are saying that the european segment is going to see some lower growth. continued headwinds in that segment. tubular in u.s., tubular into drills, they say drillers are alternating their schedule. so, they're seeing a hiccup. >> you got to applaud u.s. steel versus ak steel which was
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downgraded today. in the end, u.s. steel used to be so $130 stock. that's the ultimate psychal. >> 1997. >> when we first started working together. >> this is the new high on pfizer. 52-week high. 12k3w4r health care is a very strong business. sanofi. >> pfizer had a management change. not that long ago. when you look back, you have to admit, it wasn't a bad move. >> i like that new guy who came in. he reminds me of the guy who came in at j&j. >> again, also has a decent
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dividend yield. >> look, if the ecb does the wrong thing and we find that we get a weak unemployment rate, pfizer goes to 25. lot of ways to skin the cat. and pfizer, by the way, not an expensive stock. obviously, you get -- >> they have the key drugs coming off patent. >> the fiscal cliff, the patent cliff, i feel it's coming. >> monaco instead of monaco. >> that's just -- >> i'm telling you, i'll put it to our audience. by the way, we should mention, particularly macy's and target,
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seeing a lower because of coach. >> you look at target, which was up yesterday, by the way, and you just say, wow, what a move, if i was an analyst, i would like to ring the register and nail this down. you see that constantly in this market. listen, i want to go, just say, i plant the flag. i got target right. >> do you say the same thing about walmart? target's yield is higher. would you say the same thing about walmart at a fresh high yesterday. >> breathtaking run there. since the "new york times" bribery story in mexico. it's still by far, the cheapest place to buy things. day have the best locations. of course, we understand why. but, look, i think walmart is run too much. but walmart is the you till my
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clothing, the food. it's like there's at&t for telephone and there's walmart for clothes and food. you like that? because you're often linked with walmart, because of your age of walmart documentary. >> it's now the new age of walmart. this is the new new age of walmart. >> we're not doing another. >> come on. people are crying out for one. >> with the mexican thing. bobpy sanni is on the floor with more. >> europe turned low erlower, y know, the ecb meeting this week is more important than the fomc meeting this week, that's the one traders are focused on, this banking license would aallow the bailout fund to be able to borrow funds for the ecb and of course, that would be a huge
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bazooka. that's not going to happen. they're hoping to advance the ball here. the ecb will do three, four things. purchase bonds in primary market, that's a possibility through the ecb. they'll purchase bonds in the secondary market. they might reduce interest rates to below zero and finally a third, ltr. three things on the most likely to happen list to happen this week. look at goodyear tires, volume will be 5% below 2011. q3 earnings now turned negative. q4 is down 11%. that's important. that's where all of the earnings are backhand loaded.
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16% to 11%. yes, numbers often come down. that's statistically significant. coach's breakdown was very mysterious to me. north american same-store sales up 1.7%. everybody i saw, had 5.5% to 7%. that was a huge miss. this was the second miss in as many quarters on same-store sales. obviously, something is going on. those coupons at the factory, they're being very promotional at the factory level where they can make some real money. that's a problem. a number of companies downgra downgrading coach. there's a little bit of a bright spot, guys, and i do want to note housing continues to do well. the big builder, up 32%. these publicly-traded builders are killing on orders.
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the case-shiler number showed improvement in the second year in a row. we're seeing consequential improvement in home prices. >> thank you so much, bob. let's go to rick santelli. >> you know, it's always fascinating to try to equate the movements in the market to what we're seeing with our eyes, whether it's the housing data this morning, month over month, improvement year over year, not so much. or the fact that income was much better than spending and what does that mean? savings rate moving higher, maybe the biggest story, of course, will there be disappointment did mario draghi overpromise? i don't know. if you look at our 20-year chart. we were already coming down. you look at the euro currency, a different story. the move was rather dramatic and
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swift. if you want to talk about some of those safe harbors as we debate whether the boons that moved higher in yields. here's the poster child for safe harbor, look at a two-year german note, year to date, it's hovering around 7, 8 basis negative points. and the king of negative yields is switzerland. look to the year to date, momentarily we'll have chicago purchasing manager survey and confidence. jim, back to you. >> thank you, rich. the latest news in energy. energy really strong in the month of july. and metals. >> jim, you're so right. energy very strong this month. in fact, we'll look for perhaps the first monthly gain that we have seen for oil prices since april. we're looking at a sideways market. lot of traders are waiting to see what happens with the ecb
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and central bank's actions are going to be pivotal to where prices go this week. from the technical perspective, lot of traders say perhaps this market is a bit vulnerable. the perception and the expectation that we're going to have that. but the reality is what's going to carry this rally and keep it going. we're looking at slightly higher prices in the metal market. again, they're waiting to see what happens with the central banks to see how much further this rally could go. platinum has had the best run for the month, since october. back to you guys. ubs is not only the big european bank to report earnings. we also heard from deutsche bank. hurt by the slowdown overall in europe. net income there, falling 46%. compared to the second quarter
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of 2011. also, layoffs, look like they are in the future for deutsche bank, outside of its home in germany. so perhaps here in the u.s., in investment banking. the likes of ubs across the board, we're going to see another round of what may be significant layoffs. is it 5%, 10%? that is a possibility. the reason is pretty simple. take a look at capital markets year to date in terms of volume and where we are. it's been a relatively slow year in equities and slower year in debt. and that gives you some sense. we're a little bit better than 2010. not what had been anticipated. take a look at equity, by the way, might dictate. yes, you need to have a presence if you're a global investment
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bank, you can't get rid of every office around the world. how much can be push back on comp to keep the staffing needs that you may need or do you need to cut heads? it seems to, though, that many of these companies are going down both those roads. ubs is expected to have some more cuts. deutsche saying it will. gold man sachs is getting rid of senior people, trimming what is their work force and we'll see whether we'll hear likewise from citi. it's turning out to be a slow year for capital markets. and so, yes, unfortunately, we'll see continued losses. much of the population of the u.s. could care less. but it does have an impact. they may by fairly significant. it's happening now as the summer is ending. i have heard this from numerous
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people at many of the banks. >> the bonuses will be decimated this year as well, if there are bonus and that's another key question of where comp will come in. we haven't seen changes in comp ratios, at least from judging the last earnings reports. >> cylical? >> that's a key question. >> we don't know. what is secular is the need to hold more capital of these companies. the fact you won't be able to take leverage ratios up to where they were. that impacts profitability. look at where everything's trading below book market. that becomes the key question that's answered in terms of secular and cyclical. >> i think there can be another
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business line that these guys have always come up with new business lines. i want to point out, david, there's prosecutions everywhere, i think one day we're going to see the u.s. attorney in the southern district of new york, saying, you know what, i have had it. we're going to take some people done. going to rick santelli. >> july purchasing manager surveyed 53.. we're coming off a number of 52.9. this the best number since april's 56.2. better than expected on the pmi in the windy city. melissa lee, back to you. >> thank you very much, rick santelli. coming up next -- we'll head back across the atlanta and check with carl at the olympic games. welcome to the main entrance to olympic park. four train lines come in here.
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talk about foot traffic and just to give you a sense of how big the park is, the walk from where i'm standing to bmx, to basketball, nearly half an hour, ""squawk on the street"" is back in a moment. because the network finds it and tailors it across all the right points, automating all the right actions, to bring all the right results. [ whiing and beeping ] it's the at&t network -- doing more with data to help business do more for customers. ♪
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welcome back to olympic park on a rather cloudy tuesday morning. welcome to "squawk on the street." want to bring you up to speed on sporting events. despite some disappointments in swimming it's all about a young woman named missy franklin, only 17 years old, she's 6'1". size 13 shoe. her first individual gold in the 100 meter backstroke. if she wins the 200 meter freestyle tonight, she'll be the first one to do it from lane 8 since 1996. in terms of how well the usa has done in swimming, they have won 4 of the 5 golds. michael phelps, his signature event tonight. his third final here. his first opportunity to be the first male swimmer to win the gold medal three times.
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he's seeded fourth. medal count looks like this. china, 17. the u.s. was tied at 17. now has 18. one big event tonight, as well, men's basketball. they're playing tunisia. the only team without an nba presence. odds for u.s. to win golds they're 1 to 8 favorites to win gold overall. tunisia is 2,000 to 1. jim, wonder if you would like to take that trade? >> like zynga, it's too early to bet on tunisia. >> missy franklin seems like she could emerge as the darling of the olympics. she looks like a remarkable young woman. she turned down endorsements to compete on her high school
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tragic. a -- swimming team. >> the olympics despite all of the success we have had in swimming, has been looking for somewhat of a hero for mixed success for ryan lochte and michael phelps. missy franklin is as close as we got a sweetheart in the games. >> see you in a bit, carl. i have evidence that proves my dad's a space alien.
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it's that time. 60 eks. the board behind us says linkedin. it's the winner of this season. >> the winner from the ipo. linkedin. >> fabulous. >> all right, let's move on. valero. >> they said we can't take it anymore. they're splitting up.
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>> humana missed medical losses here. what a shame. the best hmo. >> deutsche bank said it's time to sell. >> dendreon. sales that not good. >> masco. >> a really bad quarter. i didn't like the quarter, though. >> that water polo that carl talked to yes, he liked masco. >> seagate. >> did not see the strength that western digital saw. good dividends. don't write it off. >> humana, i didn't notice that it was down that sharply. again, we have wellpoint last week which was bad. >> and equity was good this morning. humana has been the most consistent one. i would love to talk to the ceo, it's a good company. this is competition for the first time in hmos.
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>> i don't know. but it's definitely something worth watching. of course something worth watching is "mad money." >> i'm talking a about the food chain, it's going to bring big inflation in the fall. i'm staying focused. corn does not quit. could corn go to 10 bucks? 10 bucks. this is a food chain. if we start burning for ethanol, we could get it done. but ethanol is sacred. >> we like to burn our country -- corn in this country. >> see you at 11. >> we'll see each other, you know, cosmically. >> absolutely. we'll have consumer confidence. jc penney ceo and a lot more
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manager, even though the headline was stronger than expected at 53.7, one notable area we should point out especially waiting for a couple of data points on only employment and that's 53.3 on the employment index was the weak nest a little over two years. consumer confidence jumped to 65.9. and last month, june revised upward from 62.0 to 62.7. 65.9 is the best since april. when we had 68.7. so, we have had a couple of much better headline numbers with regard to how people are feeling, whether it's in manufacturing confidence. i don't know if it's energy prices or if they just stopped reading the financial newspapers. back to you. >> thank you very much, rick santelli. let's get to the road map of the next hour of kwauk on street. el will bernanke move to another key round. we'll hear from jc penney's
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ceo ron johnson exclusive. plus, it's day four of the olympic games in london and carl has gone greek. and speaking of carl quinn tia in london, let's go to london 2012 and show you exactly what a summer day in london typically looks like. carl, why did you move to the united states? and i say the weather. >> yeah, if this summer assignment, i would hate to see winter. it's a little overcast and cloudy today. about 40% chance of rain heading into tonight. everybody's hoping it dries out because it's beach volleyball. in the last hour, i did say that play unless it's lightning. there's a look at the torch, of course, which they have had to work on because some of the rain. twitter continues to be a big story today, guys, as more
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athletes are even disciplined or sent home because of tweets they sent out, it's been a mess. we'll talk more about that. we'll talk about empty seats. we have been mentioning some of those rows of empty seats. here's one of the tabloids today, simon. ticket holders may be warned upturn up half an hour late and you'll lose your seat. and then, we're going to talk to the greeks. all of this talk with mario draghi this week, we have met up th some greek fans and talked about their team's chances and whether or not they're defensive in any way about wearing the greek flag here in olympic park. guys? >> look forward to it, carl. thanks. we got the latest fed survey out. now we head back to steve leisman, with a look at some of the results. >> dave, thank you thank you very much. the interest rate outlook for
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our panel. economists and money manager and strategists, this is really important. what i want to first show you what was the outlook was for the 10-year for our survey, 2.40% and 2.6 pkts. for right now, for december, it's now 1.7%. what you can think about when you see that, basically, we have dialed in, that is almost 09 basis points of easingetter from the european crisis lackluster economic growth, whatever the reason, this is the expectation. going out a year from now, june 2013, it's 2%. compared to what the expectations were, expectations for interest rates have come down. 1400 on the dow. in this survey, now we're looking at just 1396. almost unchanged from the current level. then, take a look at 1451, 12
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months for now, that's just 4.8%. we asked folks, okay, what if the fed does have a $500 billion hypothetical q3. what would be the affect on stocks? 30% in 5 to 10% bump. think about it like a 5% to 8% bump is probably the average expectation in there. how about treasuries? they have come way down. what you'll see here is there's not much effect on treasuries in q3. now, look at the effect expected on the 30-year mortgage. remember, people out there in the market expect if they q3 it will be mortgages and treasuries. 73% think that it will bring
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down mortgage-backed security rates and the average is about call it 6 to 10 basis points. expectation in our survey, a big bump, 78% now looking for the fed to enact qe. but, guys, they're not expecting it at this meeting. 56% say it's coming at the meeting in september. you can a read all of the results of the fed survey online at simon? >> steve, i'm interested in the expected impact of a big qe? did they say what time period that is, because there's sort of general thinking now that it lasts longer. >> no. it's a good question, melissa. the person who crafts the questions, i had struggled with it with a time period.
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the question the effective qe could come in any time. we just asked a plain question, what effect dow you expect? putting a time constraint on it, would limited people's ability to say how they expect it to affect the market? because that's great question. >> part of that could be part of this 1% to 4%. >> some of that bump is already in there. >> but just t clarify, so i can really get this, if they spend half a there will dollars on qe, we might get 4% gain in the stock market and morning rates can improve by six to eight basis percentage points.
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>> you're starting to sound like a central banker, simon. weighing the cost and benefits. in other words, we'll spend half a trillion, is it worth to get x from mortgage rates, treasuries and stocks? that's a very good question. bernanke has spoken a lot about it. we put the hypothetical to the market and that's what they came back with it. >> let's bring in some expert opinion here, the chief economist with moody's capital markets research group, good morning. should i spend half a trillion dollars to get 6 to 10 basis points off mortgages or three, four, five percentage points >> it has an insurance policy, okay, the fed goes ahead and conducts qe 3. we avoid another near-miss with a recession. >> i was trying to think about a time in the last 20 years when the market has been so
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underwhelmed at the prospect of monetary easing from the fed, the reason for that surely, because people realize that we don't have a lick wety problem, maybe a structure problem, a demand problem, but we don't need injections of cash into the economy. >> right. all does it is shore up the economy. >> is it making a material impact? even inflationary rates are falling. >> that's amazing. that tells me how underlining demand is. it's incredible to think, i look an index of metals, today that's 15% under what it's averaged over the entirety of 2007, the year before the financial crisis the year before we had all of this monetary easing. quantitative easing. >> can i ask you a simple question, simple-minded, or just basic, and that is, an insurance
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policy, have we seen -- haven't we seen the impact of this insurance policy? >> if we're to say in the markets, not going to get us much in terms of the mortgage rates coming down, what kind of insurance policy that if it costs a half a trillion dollars? >> it prevents things from worsening. that's basically what it's all about. we want to consider, too, the federal reserve in effect is substituting for the lack of action on the european central bank. the real story this week the european central bank is thursday's meeting of the ecb. i think the fed has to go the extra mile. >> interesting. you don't think they're substituting for the inaction of the poll situations here in the u.s. when you talk about hiring, or indeed health care, that's what most ceos are concerned about. >> it's holding back demand and
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risk-taking. >> why don't say enough, here on in, talk to poll situation and fiscal policy isn't part of its responsibility. >> this is it. this is it now. >> there should be -- in theory there's no insurance policy against inaction by congress to resolve fiscal policy questions. theoretically, there can be no insurance against that. if that's going to be the incremental reasons why the economy gets worse. >> this would soft on the blow if we go over the fiscal cliff and if it turns out that the lack of resolve leads to these giant cutbacks of government spending and huge likes in taxes. >> do you believe that? >> i don't think it's going to happen. >> do you think that inaction by the fed could soften the blow. >> yeah, definitely. >> the front page of the washington post is having a discussion this morning about whether or not employees in the defense sector and the public
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sector could be sent redundancies notes because of the fiscal cliff, if that's a the case, whether or not they have managed to move mortgage rates by 0.06%, is not going to cushion this economy, surely? >> it would have been worse if the fed sat on their hands and done nothing. perhaps of having a real gdp decline by 3 to 4 percentage points maybe it goes down by 2 percentage points. it's there to provide some protection to the rest of the economy. you may those portions of the economy that had nothing to do with the u.s. economy falling over a fiscal cliff, shouldn't the fed -- doesn't the fed own this type of -- >> john, what about the ecb, what if we don't get what the market is hoping for given the comments from draghi. >> you're going to see the government bond yields, in
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spain, move higher. i would be very much concerned with that. i think that's going to be much great eer importance in regardso market performance. >> aren't we going to be living in europe in this state or some related states in years to come? that's a best-case scenario. >> or will we quickly reach that point where all of europe is looking at going over the abyss? and as a result, you finally have the bundesbank agree that some sort of emergency measures by stepping up buying spanish and italian government bonds are in in order. >> can i make one point? to what you were saying, david, there's a gig distinction what is expected in europe on thursday and here in thursday. we have had this on the program. we spoke about the need for the ecb to lay out what it might do and follow at the next meeting.
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that's why you're seeing a managing of expectations because people got ahead of themselves. they're trying to skam back expectations. >> the key will be the press conference dm which draghi will outline what might happen. >> the spanish yield is moving back up. >> the bundesbank is going to change their tone very quickly. >> interesting. >> with the euro continuing to come down, the germ man economy may continue to go just fine. >> but it looks to be falter zblg hey, john, good to see you. >> thank you. let's get a quick market flash here. and head over to hq with brian sullivan. >> thank you, david. herbalife shares are up 6%. the company beating the street. also raising its profit forecast
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for the full year. so herbalife is up. by the way, michael johnson, the ceo of herbalife will be a guest today on "street signs." it's a good interview. >> should be very interesting. quickly, i want to point out apple, apple is a lot of doing the work on the nasdaq in terms of keeping that index in the green. there's possibility of an apple stock split. that could be in more retail investment. >> don't split in half. you have to do something to bring it down. >> we'll watch that meantime -- >> cue the buglers.
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coming up next, we're heading back to london. we're back live from across the pond next. people have doubts about taking aspirin for pain. but they haven't experienced extra strength bayer advanced aspirin. in fact, in a recent survey, 95% of people who tried it agreed that it relieved their headache fast. visit today for a special trial offer. as the world around it. with the available lexus enform app suite, you can use opentable to make restaurant reservations. during the golden opportunity sales event, get great values on some of our newest models. this is the pursuit of perfection. jonathan horton climbed all the way to the ceiling... in the middle of a department store. some parents might have scolded him. ♪ jonathan's parents gave him... gymnastics lessons. ♪ it's amazing how far you can go
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welcome back to a cloudy day. not a foggy day in londontown as george gershwin once wrote. day four of olympic competition. so many stories regarding sports, another story regards twitter. at least four separate incidents in which twitter has played a role in either a police investigation with diver tom daley who was threatened after losing the chance to medal or an athlete themselves who tweets out something in anger that gets them in trouble. >> going into the games there was so much focus on brand management. it's the athletes themselves that seem to be drawing the attention. i have to going forward what the policy is going to with athletes. in other sporting events they're not allowed to tweet from the sidelines of a basketball game or whatever. after the trouble with all of this, i don't know if they'll be
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able to given free range. >> hope solo on twitter about brandi chastain. >> remember, people are talking about how this was going to be the first olympics of the social media games. and i think it was a reference going into it, that people would be on twitter around these live events. we saw that with the opening ceremony. the other degree that this is social media olympics. the interaction that we're seeing and the trouble that athletes are getting into. >> twitter is emotional. and i think the games are benefiting from that to a large degree. but as we have seen in all sort of stories, twitter has a dark side. let's move on to seating as well. empty seats continues to be a
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story. david cameron said, that london can do better. they recovered 3800 tickets from national olympic committees, sports federation that went unused and have released those to the public. >> what else bothers people is the extent to which london being a bit empty the stadiums being a bit empty. we want to take part in this. why can't we take part in this? clearly, a big mismatch in the market. it's just too bad. there a lot of people, carl, who would be here in a heart beat. everyone was asking around for tickets. no one could turn up these mysterious tickets. we have heard some sponsors reselling tickets here and there. there are other ways that people are keeping tickets allocated for the wealthy in some cases, they're not just getting out there in the market.
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it would be nice to see this addressed for the next games. >> guys, back in new york, somebody said to me, if you're with the ioc, for better or worse, you're royalty here at the ioc. we talked to some people, we know at least one large hedge fund manager and a former head of state who have tried to get tickets even at this late stage. totally unable to. >> one of the reasons it's not working is because they have actually blocked the prix market for operating. you're not able to sell the tickets online. you're not to sell tickets on mark-up. in westminster, for example, if you have an apartment in westminster, you're not allowed to rent it out short time for visitorses, either.
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they're not allowing to operate on the free market. >> you wonder, too, why couldn't you get into a situation, allow people cue for those events, maybe they can go in that way. there isn't really the mechanism to deal with. >> you're going to talk about how those 1%, though, do navigate the games. >> and how those 1% can secure tickets when everyone else apparently can't. >> i'm potentially how a 16-year-old is able to outrun ryan lochte in the last 50 meters in her freestyle. >> what are you suggesting, simon. >> i'm still very puzzled. >> i think you're just troubled that she can outrun you. >> thank you very much. coach reporting lower than expected fourth-quarter sales citing increase weaknesses, so are the cracks beginning to show in the high-end retail.
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♪ it's a big week for automaker earnings.
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how much will exposure to global motors affect earnings? tim, always good to see you. >> hey, mel, good morning. >> gm exposure to europe what a head wind to be. >> europe unprofitable. when people talk about it was selling its itself as global motors. 32% of first-quarter vehicle productions is going to be in china versus 30% in north america. and just to kind of set the demographics story for emerging markets for all automakers, u.s. has 77 vehicles per capita of 100 people. brazil is at 16. india is 1.2. so, you know, with russia about to overtake germany as the largest automaker in europe, you get the idea. however the head wind for gm are
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important. in addition of what's going on over here and in europe, is something that to be worried. i think they're going to point out chinese, the luxury automaker is something that's been very, very soft in the second quarter. the outlook for the second half of the year is much better. but to think that gm has a straight run in china the glory is definitely not accurate at this point. >> yeah, i think that's a good point, in china buying a cadillac it's not your grandfather's cadillac here in the united states. >> it's a lamborghini. >> exactly. in terms of price point. >> are you taking a look at what bmw is saying for example? >> well, listening to fiat, to me, they're the biggest important emerging market producers. fiat reports tomorrow. we had chrysler yesterday.
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the numbers aren't great in the preview. again, europe is the biggest head wind. less losses in europe are their keys. again, fiat is to me the player to look at. especially brazil and also turkey and other parts of the middle east, i like fiat. the read-through today isn't great. if you look at pricing, the automakers have been punished. >> all right, tim, always good to see you. >> thanks. >> catch more global trades from tim every weeknights on "fast." jc penney unveiling its first concept stores in new york. part of the ceo ron johnson's plan to revamp the store. we're going to a secret location for an exclusive interview with ron johnson about
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one hour into trading here the stories that we're squawking about. the conference board consumer confidence raising more to 65.9. economists had been expecting a decline. pfizer and at&t hit new 52-week highs. humana falls to new 52-week low. the central bank's fun and games is about to beginning. let's bring in jim, cnbc contributor and director of tgn. good morning to you, jim. >> good morning, simon. >> if you were standing there, you were standing inside the fed meeting, what would you say to everyone around the table. >> well, okay, what i would say? >> what would you say? >> they should start to back off and let things take their own course. the things they're doing don't
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seem to be providing any utility. i don't think what they're doing is helping. the best thing is to back off and let things take their course. what they're going to -- the stock market rallied over the last three weeks because of the promise of more fed action. they look at asset prices that have been buoyed a little bit. that puts the cap on where the stock market can go. >> does that mean the market falls back? >> i believe that the market does fall back. probably because of the summer, but mostly because what we need to break out of this range is some decent economic news or and i don't mean to sound politically, what the market is a notion that perhaps they're going to change the administration to a more
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friend friendly businessed a min strax. >> what would be the headline on that, what is the one thing that romney would bring to the american economy? >> i think it involves corporate tax structure more than anything else. i think regulatory issues are a part of it, too, again the market just believes that it's business-friendly. there are tons of cash on the sidelines that corporations have because they're worried about regulations and taxes. those worries are a little bit alleviated if we change administrations. >> thank you, jim. >> thank you. jc penney ron johnson getting set to unveil his top-secret store within a store prototype the rollout begins in august. courtney regan sat down to talk about the new look. courtney? >> hi, good morning, david. i'm here in dallas at a jc penney at the levi denim bar.
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earlier this morning, i did get a look at a top-secret prototype of what the new jc penney will look like and sat down exclusively with ceo ron johnson to talk again about the pricing strategy. >> you know, i take full responsibility for it, we thought going from 529 units sale where the pricing is changing all. tomorrow, we go to the first price is the right price. everyday low prices. >> you said that this was going to be a tough year, so far it has proven to be, you also said that it won't be a throw-away year financially, do you still say that? >> you know, it's been tougher than we anticipated. i said that, you know, in may. we expected it to be down. we were down a little bit more than we thought. but not enough to change the
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strategy. you know, we're treating this company as a start-up. right? we're inventing a whole new model to do business? we're creating a whole new way to shop. it's a one-year transition as part of a multi-year transformation. >> so, notice melissa, that ron johnson didn't say that it wouldn't be a throw-away year financially. coming up on "squawk on the street," we'll bring what ron had to say about the liquidity concerns that have bubbled up in recent weeks. >> is he backing away from the previous estimates of where the company is in that transition? >> you know, february is another one of those markers, remember, the transformation really began in earnest on february 1st. this coming february after the holiday is that one-year marker where we'll be significantly
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through that transformation and there have been some areas where jc penney had to back off a little bit as ron johnson has admitted that it's been tougher in some areas. >> courtney, for those who aren't prof prolific shoppers like you and melissa, what's different. >> one thing the aisles themselves are a lot wider and they're calling that the street. they want jc penney to be a destination, not just for shoppers but for those that we drag along with us, the boyfriends, the husbands, the parents, sit down in the couches, use the wi-fi while we shop in these stores. they're separated by the separate vendors. . the floor is cleaner and brighter. the tags look different. there's less sign aj everywhere. you see the pricing but it's not
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everywhere. it's less clutter. it looks like a little apple-esque. we know that ron came from apple. there are ipads. all of the associates will have iphones to help people check out with. so, it's going to be a very different concept once it all comes together. >> that sounds really cool, courtney, but the store within store concept, from what i'm seeing, it looks like any store that has gotten with the program sooner than jc penney. >> that's true. we'll have to exactly what happens. ron even admitted as time moves on, perhaps some of the sizes will change a little bit. vendors themselves get a big say in what they shop. the vendors themselves, could decide they need it to look
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different. that service component is also a little different, trying to bring everything together. but, yes, melissa, it wasn't superentirely different. it wasn't three enclosed walls. it was fairly open. you could meander from shop to shop. >> david faber is noticeably quiet through this. you're focused on the stock move of jc penney. >> it's been interesting. it moved up on the appointment of mr. johnson in the 40s. at this point, people may know, we sat down with the largest shareholder who has been behind so much of the change. >> it could be 15 times return over the next five years. we'll see if he's right. >> all right, let's get another "market flash." let's check in with brian
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sullivan. can't match the denim talk. but i can talk about beer and bud shares have been down. the stock is flat today. actually down a little bit today. north american values fell about 1.8%. bud is now owned by inbev, really a brazilian/belgian company. key market for bud, still, bad day today. but a great 12 months for this company so far. back to you. >> for example, the last time i looked in europe, down 8% >> i love carl's burger. i love the danish sensibleabili sensibleability. i like their slogan in denmark, probably the best beer in town. maybe you should try our market. over time you'll come to love it. i love their slogan. >> probably. >> probably the best show on
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cnbc. >> "squawk on the street." >> that goes without saying. >> i was plugging your show because i still have no shame. >> right. >> and we plugged his. it worked out perfectly. >> we'll help you on your show if you would like. coming up next -- we'll head back across the atlantic to carl, live from the olympic games. what's more important to the greeks, whether they win gold or stay in the euro? we chatted to some of the greeks, when "squawk on the street" continues. [ male announcer ] it's a golden opportunity...
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welcome back to "squawk on the street." live from olympic park. you know, greek hosted the first modern olympics. but the debt crisis has hurt its olympic team this year, which xwot virtually no state money. we caught up with greek fans and got their thoughts on the games, on the euro and life back in athens. >> how do you like your chances today? >> i like to think we'll do well. but we'll see. >> yeah, is it -- do you think the team has been challenged because of what the economy has been through? >> probably. yeah, but that's why we need to come and support the team. >> what do you think a bunch of medals will do for national pride? >> amazingly well. it will like lift everyone's spirits at the moment. >> show me your flag first. >> you looked like you could
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take flight with this thing. do you have friends back home? >> yes. >> how are they farg? >> very difficult. being from a business network, i think that's what actually angers me very often when i hear media reports that people talk about -- it's like fantasy economics, people talk about spreads and think and that, nobody talks about people. people are jumping off balcony and stuff. that's important to me. not the spread of boom. >> there's small businesses. >> exactly. you walk down the street in athens and half of the shops have gone. you know, people are struggling. so, we'll see. we'll survive. >> where are you from in. >> i'm greece, athens. >> we're a business network. we talk about greece all the time. what would a medal do for
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national morale? >> medal is always something that's really important. but i think it won't make a lot of a difference. it's always good to win a medal, especially gold, back home. it would be very nice. >> do you want to stay in the euro or get out. >> stay in the euro. we will stay in the olympics. >> this has nothing to do with the olympic games. we are here to party. >> we are here to party. simon, it's been tough for the greek team. they lost that match to croatia, 8-6. they face italy today. they have four medals in beijing. they have none so far here in london. the other night we were at a beach volleyball event, greece versus switzerland. announcer said, who supports uk? everybody cheers. who supports switzerland if
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everybody cheers. and who support s greece and someone yelled, the imf. >> let's mention michael phelps before we let you go this time around f he wins tonight, the 200 meter butterfly and the 800 meter freestyle, he has the record number of medals, more than the soviets in the '50s and the '60s. tonight's a big night for phelps tonight. >> he would be the most decorated olympian of all time. >> yeah, okay. big sporting day. let's move to chicago and link in with rick santelli working on the second hour, third hour of "squawk on the street." hi, rick. >> i know, third hour. having so much fun, the time flies by. at. of the hour, we'll be talking about one of my favorite european economist, he wrote a
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piece in the financial times yesterday, he used taxation without representation, wow, sounds like something that the patriots would have said in rep. we'll talk about that and the fact that yesterday was a ten year anniversary of sarbanes-oxley. have we gotten everything we deserve from sarbanes-oxley? yes and maybe more. ♪ i'm making my money do more.
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reporting lower than expected fourth quarter sales. she joins us now on the cnbc news line. in terms of the quarter how much of this is a coach specific problem and how much is because of what is going on with the u.s. consumer. >> coach blamed the entire miss on inopportune timing of taking away coupons from factory outlet stores but said traffic at the factory outlet stores was
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weaker. >> did coach also miss an opportunity in terms of its design? there was a big article citing bringing back the iconic designs. have they missed the boat when it comes to the designs of their hand bags and products? >> the design had only been in stores for a week. they were pleased so far that it was hitting expectations and the specific bags they thought were successful are successful. it is way too soon to tell and it wouldn't have helped them in the june quarter. >> i see they reinstated the coupons late in the quarter. how much of coach's operation is based on the factory outlets within the united states? >> coach has been very careful not to break that out. we think the factory stores are a key driver of the business overall in part because we think
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business at the factory stores are much more profitable than full price stores. >> if i was buying the stock because i believe that the super rich are buying what coach considers luxury goods in china. it is selling to hockey moms in factory outlets at discounted prices. you wouldn't necessarily chase it in the same way. >> the hockey moms are much more important than china is. china is just turning profitable now, we think. it is not really a contributor. the main generator is a mainstream american customer. because coach has such huge share they are very much dependent on their home market. >> just quickly in terms of the customer of coach, who is a typical customer compared to
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your coverage universe? macy's, what other brands? >> coach is 25% of dollars about 10% of units. this is a mainstream middle america middle income customer. it is a slightly more fashionable customer than full priced stores. we think factory stores are just as important to driving the results. >> thank you for your time. we appreciate it. coming up next gary and rick santelli and final thoughts from david favor. people have doubts about taking aspirin for pain.
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with the e-trade 360 investing dashboard. time for final thought. >> i will share this with you. i don't believe that facebook ipo went particularly well. >> why not? >> the stock says $22.02 almost down 5%. i am going to say this was not orchestrated particularly well. did not end up a good thing for morgan stanley and ibs. and for those who purchased shares on the ipo. there you have it.
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my final thought. i know it was very deep. >> now head to the beach. >> a keen sense for the obvious. that is where i keep my game. >> thank you very much. if you are just joining us here is what you have missed on the proceeding hours of "squawk on the street." welcome to hour three of "squawk on the street." here is what is happening so far. >> rate of growth and the balance sheet over three months, six months and 12 months is to shrink. the fed is actually shrinking its assets. >> we expected to raise 14 billion bushels or more of corn. now it appears 11 bushels or less. behaviors will lead the change. where do we need to adjust? june personal income up .5%.
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>> i'm just saying i am doing it every four days. it is good for pfizer and bad for others. >> zynga and facebook at it again. these guys need counseling. they got to sit down with a marriage counselor. it doesn't always work. >> it is underway. >> consumer confidence jumped to 65.9. >> it has an insurance policy. the fed conducts qe 3. markets have more confidence. the businesses and consumers and low and behold we avoid another near miss with a recession. good morning. welcome to the third hour of "squawk on the street." we are live here on the floor of
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the new york stock exchange. across the pond in london we are keeping track of all the action at the games at london 2012. >> there will be a lot of action tonight mostly about swimming and basketball. michael phelps as we were saying before the break in his signature event tonight the 200 meter fly if you have seen a picture of him swimming in the past two years it is this event. if he wins gold he becomes the first male swimmer to win gold three times in this event and the most decorated. men's basketball the odds overwhelmingly favor u.s. the medal count is getting interested. u.s. with 18. china with 17. the break down for the u.s. goes 6, 7, 5.
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speaking of michael phelps we know coaches had a tough morning already. we are talking to omega not only a big sponsor of michael phelps, we will talk about what it means if the big endorsee does not do as well as expected. we will see if coach is an outliar or maybe a sign of something more wide spread. >> thank you in london. let's check on the markets. we are waiting for the end of the fed meeting tomorrow and then we are waiting perhaps more importantly for one european central bank on thursday. flat at the moment. you will be aware markets are up about 8% from the june lows. coach the biggest loser on the s&p today. tiffany getting pulled down sharply in sympathy as you can see. nokia one of today's biggest gainers up sharply on news that
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ceo and director bought 1 million shares in a public show of confidence. the stock is up more than 20%. in europe you have had a big theme over the last three or four sessions of short covering. time for the road map. jc penny is reinvinreinventing how you can avoid the traffic and congestion in london caused by the olympics if you have enough money. see how the mega rich are by passing the grid lock by air and sea. see how it all plays out when we bring you the european close. and the official time keeper of the olympics is changing the way spectators watch the game. the ceo of omega will tell us about it.
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let's start with the cnbc exclusive. >> we have breaking news in d.c. >> just within the past couple of minutes the scc releasing a major report on the $8.7 trillion security market recommending a broad range of changes. saying in this report that the securities market has not been subject to the same levels of regulation as other sectors of the u.s. market due to exemptions. they are recommending things like congress considering authorizing the sec to set baseline disclosure standards and require audited financial statements, a whole host of other details and regulatory proposals. i think the bottom line is don't expect this to become law or
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regulation anytime soon but a host of new recommendations for municipal securities. let's start with our cnbc exclusive. jcpenney has started to transform the new format that ceo ron johnson envisioned as he came over from apple. our courtney reagan is live in dallas and spoke to ron johnson this morning. >> good morning. we are actually at a store no longer at the top secret prototype but we were there this morning where we got to see it for the first time and sit down and talk to ceo ron johnson. i talked to him about the fact that since the transformation was announced the stock price down more than 30%. johnson said he doesn't look at
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it every day but investors do and so far the grade isn't that positive. >> i think one of the things we have done is we haven't told our story. in the absence of information there is a lot of misinformation like all the comments about our balance sheet. we have a rock solid balance sheet. the least fear i have is liquidity. we are trying to retrain our customer and do a lot of work. part of my talking to you today is we think we are going to share with investors where we are headed. i think when they see the vision at least the longer term investors will be more inclined to want to participate. >> you spoke a little bit of liquidity last week and you sold some of the noncorps assets. you said the balance sheet is strong. you said you can self fund this transformation. is that still the case? >> absolutely.
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we can self fund this out of our cash flow. this year we will invest nearly $800 million. our balance sheet is strong to do that. so we don't have a concern about cash. we have a concern about really communicating to our customer. we have noncore assets which is a benefit. we are misunderstood on the balance sheet. and what we do here every day we think monetizing is a long term opportunity for us. the stronger the balance sheet the better for investors. >> i asked johnson how he would grade himself if he had to give himself a report card today. he said long term a b plus. in the short run lower. he said because of the pricing fumble and the confusing messages to consumers he couldn't give himself as high of
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a grade. >> why in the long term a b plus? as a share holder that is terrible news to me? the guy is giving himself a b plus long term. >> i think what he is thinking right now is that he sees this prototype. we got to see it today. it is not in the stores yet and hasn't seen how the consumers are going to react. they have done market research. they think that they know but did market research before on the pricing and that didn't turn out how they thought it would. >> you don't want to be hostage to fortune and say i am giving myself an a longer term. >> do you want to overpromise and under deliver? >> what would you say if i said how would you grade yourself? >> i would say i'm not the right judge of myself. >> i thought the most interesting thing -- i thought the most interesting thing was
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when he said he needs to retrain the customer. and that is the biggest question. it is like facebook saying we are going to retrain the advertisers. that is a long shot rather than saying the customer is always right. >> yes it is. if you are trying to augment consumer behavior so far it hasn't worked. if he is trying to do it long term. if he can do it it will transform the face of retail. we know both of them are literally invested in the success of that transformation. >> the view from texas for the prototype on jcpenney. let's bring in our market expert. >> i suspect how can you have a long term grade? how can i -- i would be more concerned if i am a share holder. long term grade is three to five
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years. long term grade should be incomplete. can't be a b plus. it should be incomplete. as you know the producers like to have a segment title or something along those lines. >> an agenda. >> today i'm going to talk about why you think you might not be a global investor. dupz quantitative easing create jobs? i have asked the question to portfolio managers, economists, managers and people in business in general. nobody has an answer to the question. i then go to google like everybody does and put the following phrase into my google question line. does quantitative easing add jobs? there was 793,000 responses to that. i went through let's say 100 of them. i did not go through all
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793,000. not one of those qs gave me any answer to that question. they were all political depending on the side of the argument you are on. as the central banks get ready to speak you have to understand that there is a built-in belief that further easing of monetary policy will in fact create jobs. atd end of the day the fed is there to do two things, full employment and make sure we don't have inflation. every time somebody buys and sells a security if you are a buyer today and you buy something whoever is selling it to you they believe they are going to be selling at the top price. selling at a price down the road at a higher price. what does it have to do with global? every single person that buys and sells a security today, tomorrow or the rest of this week is making a bet that the
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quantitative easing if we get it is in fact going to be good for the economy. while you may think you are a stock picker you are not right now because you are making that bet. you better believe you are. >> is the bottom line point here that things are correlated so therefore whenever yowl are buying a stock you are betting on the fortunes? >> there are times during my career where stock pick is market. there is times when stock pick is market. you have individual stock stories. we have plenty today. my point right now is in the short term the bet on quantitative easing and what it will do for the question i asked google will override anything. speaking about specific stocks come back about facebook. we talked about the model yesterday. you saw what david was talking
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about. i have cullenolor on what might happening today. let's go to rick santelli. a couple of days ago a very famous economist commands a great deal of respect. in the financial times piece he said a couple of things i find fascinating. on euro bonds which lead to hire interest rates to government bonds in countries of so-far good reputation in financial markets. it would be a violation of the fundamental democratic principle of no taxation without representation. this is true to all forms. we can say that he was talking about bailouts and specifically about programs that forgive and buy securities of countries that are in trouble but the context of this article was much bigger
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than that. specifically talking about the political union. united states of europe really need that. when he says he agrees. it is a couple of years down the road but to have the programs and taxation without representation in his opinion is a horrible way to progress towards the ultimate status of political union. he goes on to say that they have treaties and commitments now that should be able to handle this. what it really boils down to is what we have talked about many times on the exchange that is taking responsibility whether an individual or a country. taxation without representation. every time i say it i think of boston circa 1750s. another point. if we look at sir banes oxley which se which -- sir banes oxley
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sometimes you have to take an easy route and take a breath and make it simple. after ten years we have saddled companies with higher expenses to comply without results on the other end. back to you, simon. >> i will take it. thanks for that. let's check with brian sullivan. >> u.s. steel up 9%. you had the numbers coming down. here is the key. european operations return to profitability. the role of the tubular division is doing well because of drilling and fracing. as much as the drop u.s. steel up about 9.5%. >> coming up next helicopters to boats london's wealthiest
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visitors are using any means necessary to avoid the traffic of the olympics. how much are they paying for life in the fast lane? find out right after this. [ male announcer ] while many automakers are just beginning to dabble with the idea of hybrid technology... it's already ingrained in our dna. during the golden opportunity sales event, get great values on some of our newest models.
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with millions of people streaming in for the olympics traffic has been a problem for the most but for the 1% it isn't the same. >> reporter: with over a million visitors expected in london for the games the city's trains and
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roads are packed with tourists and locals alike. for those who can afford it there are ways to by pass the crowds. it starts from the moment you land at the heliport often linking those by jet to the heart of london. this year's between the queen's diamond jubilee and the olympic games it is busier with business up some 20%. >> we have had up to about 150 slots over the period. we expect some more. a lot of those bookings have been planned long in advance for sponsors and senior executives. >> reporter: once you land diplomat cruises is one company happy to complete your trip. this pad to park service doesn't
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come cheap. you can charter this boat for 12 hours. if you have to ask how much you are probably not going to be using it. for 4,500 pounds or $7,000 the yacht and captain are yours for the day. if the boat looks familiar that's because it took james bond himself for a ride in the film "the world is not enough." once on board it is not a martini you are offered but champagne. >> we can give it to you shaken or stirred. speaking of the 1%. we will talk to the head of omega purveyor of watches that are well into the thousands of dollars.
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>> why didn't you get assignment to go on that boat? [ laughter ] that's crazy. we'll see you a little bit later on. we are counting down to the close in europe only about 7 minutes to go. we'll bring it to you live back after this. every powerful colln is backed by an equally powerful and secure cloud. that cloud is in the network, so it can deliver all the power of the network itself. bringing people together to develop the best ideas -- and providing the apps and computing power to make new ideas real. it's the cloud from at&t. with new ways to work together, business works better. ♪ with new ways to work together, business works better. well another great thing about all this walking i've been doing is that it's given me time to reflect on some of life's biggest questions. like, if you could save hundreds on car insurance by making one simple call, why wouldn't you make that call? see, the only thing i can think of is that you can't get any...
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flash. apple stock, could it be added to the dow. could they be considering it. it is the only dividend paying stock with the market cap where it is. the big next event is september 12th. apple is now back above where it was the day before it collapsed on those disappointing numbers. so it made all that back in just a couple of sessions. >> if it is split two for one it would be the biggest weight and the biggest impact on the dow. thanks for that. european close coming up next. 7 [ male announcer ] it's a golden opportunity...
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. under a minute to go to the close in europe. >> if it is disappointment over this this meeting in thursday the politicians may only have themselves to blame. today italian prime minister was with the french president. they are repeating the same message that they will do everything. the eurozone is consolidated. earlier today the italian broadcaster was told that the
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rest of europe is approaching the end of the tunnel, the european institutions and the governments of individual countries are willing to work together. let's check out where we are closing on this session. >> european markets are closing now. >> as you can see there is a lot of red around today. it is interesting because you have the strong rally coming on the comments thursday, friday and into this week. let me show you a chart of where we are. the white line here is yus the last week. it is spanish equities. the yellow line is italian equities and the blue line here is generally the top 50 blue chips around europe. in that week you will see that spain has gained 12%, italy 12% and in general blue chips are up over 8%. the rally is stalled as we go into the waiting mode. the earnings weren't great
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today. we mentioned ubs coming through around 6% of the close. that is a life price. profit down. $356 million loss as a result of facebook and obviously legal action there. bp amongst the big oil majors. very weak operationally, as well. as we wait for what may be said on thursday let me bring you one research note from a former senior ecb official. he is now an economist working for goldman's. he is suggesting on thursday they may announce credit easing at the 17 national levels within a broad framework he is suggesting that they will say to the national member central banks which still exist you can go in and buy at your discretion private sector assets in to order to have some form of
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release for problems in certain parts of the economy targeting real differences between the german situation and the spanish. in a sense you are moving away from centralized central bank operations just to come back to the central issue are you going to get buying of the spanish and italian bonds announced on thursday. clearly the bank today playing down the possibility. the bank doesn't want that to happen. don't forget two germans resigned in protest at bond buying. in the reuters survey ten said they would be by on thursday. the slight majority that that would be announced still almost half the market on just that small sample suggesting that this is not the week in which that is announced. >> it will be interesting to see
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what the u.s. markets will do in response tot that. that is the outcome. >> i would have said the rally here was a lot to do with what the ecb is saying. what you see on this program is people say no this is about the feds. we rally to you on expectations of the fed. you are looking at me quizicly. >> last week's action was all about what was said out of the ecb. anyone who tells you they had expectations for the fed is wrong. i will leave it at that. last week was all about the followup comment. >> they are all doing it for good or bad. >> that is when we told you. you have to pay attention. let's check in with rick santelli. >> welcomeira harris. old friend to cnbc. in my last episode i talked
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about july 29th. you have read it numerous times and had an additional take on it. >> the piece was an amazing piece because he brings out two big points and i blogged about it. the fact he brings out any type of transfer union without the german populous being behind it would be taxation without representation. i found it interesting because the piece occurred before the trip to europe in which he carries a lot of weight. no question about it. a banker with a lot of credibility. he talked about how foreign elements, foreigners, were pushing the europeans to do what they are doing now because they didn't want to feel the effects of anymore negative fallout from
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europe. he calls that an impingement on democracy. >> why do we talk about that again? that foreign part leads into how many headlines we see with our treasury secretary. >> we saw a few. i thought we would see more. we actually have not seen any headlines coming out of the meeting which took place in frankfurt. the other one took place. we saw a couple of pictures. it was nice to see -- >> you don't see big news coming from that particular meeting? >> i love that gietner can't come back empty handed. they told him. >> yes. rick, it's gary. let me ask a question. there is a thought out there that what we may have seen last thursday and i know simon is going to jump on me. the europeans love their
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vacations and holidays. when i hear it from one person i think two, three, four. is it possible that what we may see on thursday is really just an extension into september because in fact they don't want to do anything as crazy as it sounds to mess up and change the schedules of all the various vacations. >> that is actually offensive. that is actually offensive to say that about europeans that they are not going to do what is right. record unemployment announced today. 163 billion euros left spain. you think they are just going to go to holiday and leave it. >> they do the same thing here in the united states. >> they are talking about geithner not on the holiday. >> if europe was to melt down this weekend, simon and you had
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a cruise planned for next week and our boss called you up and said forget the cruise we have to cover europe. would you be there covering europe in. >> of course. >> i rest my case. gary is right and it knows no borders. shame on our congress. shame on the europeans. shame on all of them when you have countries with 25% unemployment when they are taking numerous weeks off without questioning it. >> this is not -- >> i'm really sorry. they are not on holiday. you have just seen footage of them having summits. >> there is an expectation among certain participants in the global credit markets that what they will do -- >> you americans probably don't know europe very well. it is global credit portfolio managers who believe what they will do and i'm not going to use that phrase but i guess i will have to, kick the can down the.
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>> they are going to give a time frame in a lot of people's minds where we will come back and lay the foundation and only for that reason. >> when the federal reserve doesn't embark on qe 3 are you going to say that is because everybody is on holiday? >> that's because they broke up. >> bernanke did not leak to the press. >> he stood up at the summit and verbally intervened in the markets. >> we didn't get to hear whether or not he believes it is conspiracy theory? >> let me step back on that thursday. i look at that spanish curve when i was on with steve when dragi was making comments.
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when i look at the curve it scared the hell out of him. when that curve was starting to flatten then you saw massive intervention. you saw on november 30th you saw the six major central banks announce a dollar swap plan unlimited. and then on december 21st you turn the curve. last monday we almost got down to that level of 11/25/11. i think he looked at that and said uh oh nobody wants to buy short term spanish debt. he was afraid that there were a lot of people waiting. i would remind simon 2003 in august 14,000 elderly people died in august because everybody
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was away on vacation. that makes gary's point and that is the way the world sees europe. you cannot deny that that took place in paris that seniors died because everybody was away on vacation. i rest my case. >> am i expected to respond to that? >> let's leave it there. >> you got to respond to it. >> let's leave it there. switching gears here. facebook hitting new lows. 21.86 is the new low set on facebook. the damage is wide spread. zynga is down. what are you hearing? >> yesterday we presented quantitative data on what facebook may or may not be worth. i did hear today it is impossible to have approved this. what you may be having happen
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now is that the institutions that bought facebook around 27 and 28 in anticipation of this quarter decided they don't want it. you are seeing sizable selling. unless i am looking at the older books it is impossible to confirm this. i did speak to a gentleman on the floor and it looks as though what you are having now is those who bought this thing on a fundamental reason over the last several weeks have decided to throw in the towel. >> we also had the upgrade today. that could help facebook shares. the price target is $23 a share. the stock was higher than $23 when this note came out. it is sort of like a backhanded compliment. >> in a sense what you have is you have a lack of real strong demand from any type of buyers. you have scared away every type
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of potential buyer who typically comes into a name when it is down. where you are going to establish a new level of buying i have no idea. >> isn't that a function of having exhausted the outlet by increasing the flow and the price? >> that is a function of the ipo. the typical long buyer who may have wanted to have an appetite for more shares going back to the original day have exhausted that thing. what you have done with the first quarter is you have now -- what's a polite way to say it? you have now annoyed these people so much with what you put out there in the quarter that they are throwing the towel. annoyed is a polite way to say it. >> let's check this. dow is relatively flat across the board. mario said he would do anything
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to save euro. i think they are going to try to hold that to him this week. traders are expecting a lot from the stock market right now. i think complacency is a little high. here are the three things that worry me. the expectations for a big aggressive stimulus. we know there is not going to be a banking license. low interest rates and lower rates is not going to do it. we better see a bazooka of a bond buying program. they are not going to give the okay for a trillion euro bond buying program. what will satisfy people? i think the expectations are a little high. everybody seems to be expecting the fiscal cliff to go away. if they half work it out and taxes go up a little bit it is still a significant hit on gdp. finally another double digit gain in earnings in 2012. put this back, please. go back to the earlier one about
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what has been going on. the concern here is the numbers are coming down. the second quarter if you go back to the prior screen the second quarter is now on the negative side. third quarter is negative. fourth quarter was 16% a few weeks ago and now it is 11%. this number is going to be in the mid single digits within the next month or two at the rate we are going. the markets not factoring that in. take a look at what we are expecting for the overall earnings. we had a record earning last year. $103 would be an all-time record earnings. that is with the lowered numbers. 2012 expecting 114. the numbers are still very high even with the coming down they are still too high. how about the earnings growth. we have been talking about this. we are looking at expectations of earnings growth of 11%. 8 and 9% with the second quarter 2%. third quarter 2% and the fourth
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quarter at 3%. you are not going to get that earnings growth with these kinds of top line growth right now. a little too much complacency in the markets. up next on the program the official time keepers of the olympics. see how omega is changing the way people watch the games. we will hear from the ceo and london 2012 on the networks of nbc. with the fidelity stock screener, you can try strategies from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks. then you can customize the strategies and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments. the expert strategies feature is one more innovative reason
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coming up on half time pim co says the time of making money in stocks is over. gold on a tear of five car fund manager reveals the stock. what is behind the bullish bets on coals. our traders have the answer. now back to carl in london at olympic park. thanks. time is everything when it comes to the olympics. the difference between a gold and a bronze can come down to a mill second. omega is the official sponsor of the olympics. we talked to the ceo about its presence in london. i think about our coverage and every time an event ends there is the omega logo. is there a way to put a dollar value on all of those impressions. >> we are here to be the time
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keeper timing every event. it is difficult to give a dollar figure. i know we are on cnbc and dollars are important. one is to see the brand. it is very important. it is very important that what we do below the line and above the line to explain what time keeping is about. i think people don't realize what is around this. >> michael phelps some said his first race disappointing. he is an ambassador of the company. what is at stake when an athlete doesn't do as well as he wants? >> we are the official time keeper of the sports and all athletes. we have michael phelps and a few others. we are very happy. we do not interfere or intervene at this level. michael won eight medals in
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beijing. >> can i ask you some business stuff? >> you can. >> would you say the challenge is greater out of europe or out of china? >> business in europe is very good. the prices are -- i would say it is pretty much across the world. >> if the global economy has a fire that needs to be put out, where is it? >> obviously i'm not saying anything that nobody knows that europe is difficult. there are many countries going through a difficult stage. i would say that overall around the world it is a pretty general positive picture. >> omega has been the official time keeper since 1932. the games back in los angeles. back then they had 30 guys with stop watches. today it is more like 400 tons of time keeping equipment. they showed us the starting gun
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which is fascinating. it is not a gun, per se. it literally plugs into the starting block. the swimming block is new in that it has a bit of an angled step which they have never had before. you might notice that as some of the swimmers take off before they get into the water. i did not know this, simon. swimming is the only sport where the clock is brought to an end by the human hand. when the swimmer touches the pad under the water everything else is usually a pvc cell or a motion detector. >> interesting. i didn't know that. >> i didn't either. it is hard to imagine in los angeles it was probably done by the second. is there talk about it being
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finer? >> especially with the competition in swimming and track and field where the difference between gold and silver is often a milisecond. afew sponsors have the responsibility that omega has. >> just to come back on. you were suggesting is it a problem for sponsors when athletes don't do as well as you hope. what a magical moment when ryan lochte won his first swim and immediately it went to a commercial break and there he is in the commercial. it was just perfect from one set of images to the next. >> that is bang for your buck. >> extraordinary. lots more still to come on the program and final thoughts. stay with us. people with a machine. what ? customers didn't like it.
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lineup for tomorrow. >> we talked a lot about swimming and basketball. one thing we haven't mentioned beach volleyball. misty may-treanor and kerri walsh jennings won every game, every set, every match in their sport since athens back in 2004. that is an olympic record and they are playing austria tonight. we are going to go to watch the sport. we have no interest of bikinis or no bikinis. tomorrow we will bring you a haitian triple jumper competing next week but was also mark zuckerberg's room mate their freshman year at harvard. he is the 14th member to be on facebook when it was a college project. we are going to talk about him jumping for


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